The Fiscal Council proposes the introduction of a new mechanism that would turn program budgeting into a real tool for managing state finances. The idea is that each budget program should be evaluated according to the results achieved, the public benefit and the efficiency of the funds spent, and not only according to the amount of the allocated budget.
For this purpose, changes are envisaged in the Public Finance Act, which would introduce a mandatory evaluation of all budget programs once every two years. The Council of Ministers will have to adopt a unified methodology with clear evaluation criteria, reporting rules and a schedule for conducting the evaluations.
According to the proposal, the Ministry of Finance will coordinate the process, create a national database and prepare proposals for redirecting funds. Individual ministries will collect the necessary data, report on the results of their programs and conduct an initial internal assessment.
It is also planned to create an independent expert council at the Ministry of Finance with the participation of representatives of the Court of Accounts, the Fiscal Council, the National Statistical Institute, academia and external experts. Its task will be to independently assess the programs and compare their effectiveness across sectors.
Each budget program will receive a score on a 100-point system. The implementation of the set goals and the ratio between costs and achieved results will have the greatest weight. The social impact, compliance with the state's strategic priorities, the quality of the services provided and the opportunities for improvement will also be assessed.
The mechanism provides for two stages of assessment. First, each ministry will rank its own programs according to the results achieved. 10% of the programs with the lowest scores will be subject to mandatory review. For those that do not meet the minimum requirements, closure, merger with other programs, restructuring or budget reduction may be proposed.
The Ministry of Finance will then collect the worst performing programs in a common national list. The independent expert council will make a comparison between the individual sectors and propose which programs should be terminated, which should receive less funding and which activities can be merged. The saved funds will be redirected to more effective policies.
The freed financial resources will be used with priority for reducing the budget deficit, co-financing of European programs, capital investments, education, healthcare, scientific research and digitalization of the administration.
It is planned that each program will be monitored annually and undergo a full evaluation every two years. A comprehensive review of all public policies will be carried out once every four years.
For greater transparency, the Ministry of Finance will publish annually the results of the assessments, the indicators used, the proposals for changes, the savings achieved and the way in which the funds have been reallocated. The information will also be presented to the National Assembly during the discussion of the state budget.
According to the Fiscal Council, the reform can be introduced in stages over a period of three years. In the first year, the necessary legal changes will be adopted and pilot implementation will begin in several ministries. In the second year, the first national assessment will be carried out, and in the third year the mechanism will cover all state institutions that manage budget funds.
The Fiscal Council expects the new system to reduce inefficient spending, limit the budget deficit, increase the quality of public services and direct more funds to policies and investments with the greatest benefit to society. According to the authors of the proposal, this will transform program budgeting from a formal procedure into a real tool for better management of public finances.
Source: nova.bg